Matador Resources(MTDR)2024-10-23 21:35Financial Data and Key Metrics - The company expects to have over 200,000 BOE per day in 2025, driven by the integration of Ameredev assets and the full-year operation of nine rigs [15][16] - CapEx for 2025 is expected to be slightly higher than the $1.25 billion spent in 2024, primarily due to the full-year operation of nine rigs and the high working interest from Ameredev wells [16] - The company reduced its drilling and completion cost per lateral foot from $1,010 to $930, an 8% reduction, driven by operational efficiencies and the use of Trimul-Frac technology [21] Business Line Data and Key Metrics - The Ameredev acquisition is performing better than expected, with production increasing to 31,500 BOE per day in the last 13 days of Q3 2024, up from 26,000 BOE per day at the time of acquisition [29][30] - The company has successfully integrated Trimul-Frac technology, which has saved approximately $20 million by converting over 90 wells into Simul- or Trimul-Frac candidates [48] - Midstream operations achieved record EBITDA, with over 99% uptime for the plant, and the new plant is on track for completion in 2025 [40][42] Market Data and Key Metrics - The company is optimistic about the eastern side of the basin, particularly the Antelope Ridge area, where well results have confirmed the quality of the rock [31] - The company has a significant gas bank in the Cotton Valley, with over 200-300 Bcf of gas opportunities, and 1.4 Tcf of gas reserves in the Delaware Basin, providing flexibility to pivot to gas if needed [60] Company Strategy and Industry Competition - The company emphasizes profitable growth at a measured pace, with a focus on maintaining a 20% annual growth rate, leveraging a portfolio of 2,000 drilling locations with a >50% rate of return [13][14] - The company is open to acquisitions, particularly those that add to its inventory of undeveloped acreage, as seen with the $66 million in acquisitions in Q3 2024, which added minimal production but significant inventory [35][36] - The company is exploring ways to unlock midstream value, with potential opportunities being studied, including partnerships and capital allocation strategies [38][39] Management Commentary on Operating Environment and Future Outlook - Management is confident in the company's ability to continue improving operational efficiencies, particularly through the use of remote operations and produced water for hydraulic fracturing, which reduces costs and environmental impact [22][26] - The company expects to see further LOE reductions in the Ameredev area, with $1 million in monthly savings already identified, primarily from the use of recycled produced water and optimized chemical usage [51] - Management is optimistic about the future, citing strong well results, operational efficiencies, and the successful integration of Ameredev assets as key drivers for growth in 2025 [53] Other Important Information - The company's CEO, Joseph Foran, was awarded the Legacy Award by the CEO Magazine, recognizing his contributions to the industry and the growth of Matador Resources from a $270,000 startup to a $6.5 billion market cap company [61][62] Q&A Session Summary Question: Shareholder returns and potential for stock buybacks - The company prefers fixed dividends over buybacks, as they are more aligned with long-term shareholder interests and do not require additional debt [8][9][10] Question: Capital allocation and rig count for 2025 - The company plans to maintain nine rigs for the full year in 2025, with CapEx expected to be slightly higher than 2024 due to the full-year operation of rigs and the integration of Ameredev assets [15][16] Question: Cash tax expectations for 2025 - The company expects cash taxes to be lower in 2025, with the corporate alternative minimum tax (AMT) not applying, and the actual rate will depend on available deductions [19] Question: Operational efficiencies and cost reductions - The company has achieved significant cost reductions through the use of Trimul-Frac technology, remote operations, and produced water for hydraulic fracturing, with further efficiencies expected in 2025 [21][22][26] Question: Ameredev asset performance and future outlook - The Ameredev assets have outperformed expectations, with production increasing to 31,500 BOE per day, and the company is optimistic about further development in the Antelope Ridge area [29][31] Question: Midstream value and CapEx for 2025 - The company is exploring ways to unlock midstream value, with CapEx expected to decrease in 2025 as the system is built out, moving towards a maintenance capital model [38][42] Question: LOE trends and Ameredev integration - The company expects LOE to decrease in the Ameredev area, with $1 million in monthly savings already identified, primarily from the use of recycled produced water and optimized chemical usage [51] Question: Ground game and M&A opportunities - The company expects to see more M&A opportunities in 2025, particularly from larger companies rationalizing their portfolios and private equity firms turning over assets [55][56]